999 F.

2d 509
62 USLW 2168, Fed. Sec. L. Rep. P 97,723

Charlie LUCKIE, Jr., Barbara C. Luckie, Henry C.

Satterfield, III; John S. Mooshie; Jere A.
Hughes and Doris Kahn, Plaintiffs-Appellants,
v.
SMITH BARNEY, HARRIS UPHAM & CO., INC., DefendantAppellee.
No. 91-4131.

United States Court of Appeals,

Eleventh Circuit.
Aug. 26, 1993.

Robert Dyer, Duckworth, Allen, Dyer & Doppelt, Neal J. Blaher,

Orlando, FL, for plaintiffs-appellants.
Jeanne T. Tate, Hill, Ward & Henderson, Tampa, FL, for defendantappellee.
Appeal from the United States District Court for the Middle District of
Florida.
Before COX, Circuit Judge, JOHNSON, Senior Circuit Judge, and
ATKINS* , Senior District Judge.
PER CURIAM:

Appellants Charlie and Barbara Luckie, Henry Satterfield, John Mooshie, Jere
Hughes and Doris Kahn filed a motion in district court to compel arbitration of
their disputes with Smith Barney, Harris Upham & Co. (Smith Barney) before
the American Arbitration Association (AAA). In various securities account
agreements, appellants individually had agreed with Smith Barney to submit
disputes to arbitration either "in accordance with the rules of" or "before" the
New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) or
the National Association of Securities Dealers (NASD). Appellants argued that

these agreements did not limit their ability to elect AAA arbitration under
provisions of the AMEX Constitution. The district court held that the
arbitration agreements did not permit appellants to compel Smith Barney to
submit to arbitration before the AAA. Accordingly, the district court denied
appellants' motion to compel arbitration and dismissed appellants' related action
for declaratory judgment. See Luckie v. Smith Barney, Harris Upham & Co.,
766 F.Supp. 1116 (M.D.Fla.1991). We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
2

In March and April of 1989, appellants filed with the AAA demands for the
arbitration of disputes they had with Smith Barney over the alleged
mismanagement of their accounts. Appellants maintained that the provisions of
agreements they had individually entered into with Smith Barney1 left open
their option of electing AAA arbitration under Article VIII, Section 2 of the
AMEX Constitution--what the parties refer to as the "AMEX Window." The
AMEX Constitution provides that members of the exchange "shall arbitrate all
controversies arising in connection with their business ... between them and
their customers as required by any customer's agreement or, in the absence of a
written agreement, if the customer chooses to arbitrate." AMEX Const., Art.
VIII, 1. The AMEX Window states that:

3
Arbitration
shall be conducted under the arbitration procedures of this Exchange,
except as follows: ...
4 if any of the parties to a controversy is a customer, the customer may elect to
(c)
arbitrate before the American Arbitration Association in the City of New York,
unless the customer has expressly agreed, in writing, to submit only to the arbitration
procedure of the Exchange.
5

Id. 2.

The language of the appellants' individual agreements with Smith Barney

varied only slightly.2 The Luckies' Option Account Agreement,3 and Mooshie's
Security Account Agreement provided that:

7 undersigned agrees that all controversies between the undersigned and Smith
The
Barney and/or any of its officers, directors or employees concerning or arising from
(i) any account maintained with Smith Barney by the undersigned; (ii) any
transaction involving Smith Barney and the undersigned, whether or not such
transaction occurred in such account or accounts; or (iii) the construction,
performance or breach of this or any other agreement between us, whether such

controversy arose prior, on or subsequent to the date hereof, shall be determined by

arbitration before the National Association of Securities Dealers, Inc., the New York
Stock Exchange, the American Stock Exchange, or any recognized arbitration
facility provided by any exchange and in accordance with the rules of such body
then obtaining....
8

Mooshie's Option Account Agreement was substantially the same as the

Luckies' Securities Account Agreement, which provided that:

9 controversy between Smith Barney and me arising out of or relating to this

Any
contract or the breach thereof, or to any transaction involving Smith Barney and
myself, shall be settled by arbitration, in accordance with the rules, then obtaining,
of the New York Stock Exchange, American Stock Exchange or National
Association of Securities Dealers as I may elect....
10

Doris Kahn entered into a Vantage Account Agreement with Smith Barney,
which referred to and was governed by the terms of her securities account
agreement with Smith Barney.4 The securities account agreement provided:

11 controversy between Smith Barney and me arising out of or relating to this

Any
contract or the breach thereof, shall be settled by arbitration, in accordance with the
rules, then obtaining, of either the Boards of Arbitration of the New York Stock
Exchange, American Stock Exchange or National Association of Securities Dealers
as I may elect....
12

The New York Stock Exchange (NYSE), the American Stock Exchange
(AMEX) and the National Association of Securities Dealers (NASD) are selfregulatory organizations (SROs) overseen and regulated by the Securities
Exchange Commission. The AAA is an independent arbitral forum.

13

After Smith Barney notified appellants that it would not arbitrate before the
AAA, the Luckies filed a complaint in Florida state court. They sought a
declaratory judgment that they had the right to compel Smith Barney to submit
to arbitration before the AAA. Smith Barney filed a motion to dismiss, abate or
stay the Florida action. Smith Barney then removed the action to the United
States District Court for the Middle District of Florida, invoking that court's
diversity jurisdiction. The district court deferred ruling on Smith Barney's
motion to dismiss pending the resolution of a similar action filed by Smith
Barney in New York state court. In February of 1991, appellants filed another
action in the district court--a motion, pursuant to the Federal Arbitration Act, to
compel Smith Barney to submit to arbitration before the AAA.

14

On June 7, 1991, after waiting nearly two years for the New York court to
resolve the action filed by Smith Barney, the district court in Florida decided to
proceed and lifted the stay in the actions brought by appellants. Luckie, 766
F.Supp. at 1117. The court first consolidated the declaratory judgment action
brought by appellants and the appellants' motion to compel arbitration. Id.
Noting that arbitration agreements are enforceable as normal contracts, the
court concluded that the parties' agreements and the provisions of the AMEX
Window did not permit the appellants to compel Smith Barney to submit to
arbitration before the AAA. Id. at 1119-20. Accordingly, the court denied
appellants' motion to compel arbitration before the AAA. Id. Having held that
AAA arbitration was not available, the court then granted Smith Barney's
motion to dismiss the declaratory judgment action. Id. at 1120. The court
entered judgment for the defendant, Smith Barney, in both the motion to
compel arbitration and the declaratory judgment action. Id.

II. ISSUES ON APPEAL AND CONTENTIONS OF THE PARTIES

15
16

The issues we address here are (1) whether customers by agreement can limit
their ability to elect AAA arbitration under the provisions of the AMEX
Constitution and (2) whether the agreements here between the customers and
Smith Barney limit arbitration to the three SROs or whether these agreements
leave open the option of arbitrating before the AAA.

17

Appellants contend that a customer cannot waive what appellants term the right
to select AAA arbitration under the AMEX Window. Alternatively, they argue
that a customer and a broker can eliminate the choice of AAA as an arbitration
forum only by language which limits arbitration to the AMEX only.

18

Smith Barney argues that these arbitration provisions of the customer

agreements are enforceable and close the AMEX Window. Smith Barney
points to the language of the customer agreements--which provide either
expressly for arbitration before the three SROs or for arbitration "in accordance
with the rules of" the three SROs--to support its contention that appellants have
agreed to arbitrate before the NYSE, AMEX or NASD.5

III. STANDARD OF REVIEW

19

Where, as here, the district court examines and construes a contract without
reference to extrinsic evidence, its interpretation of that contract involves only
questions of law. Securities Exchange Commission v. Elliott, 953 F.2d 1560
(11th Cir.1992). Accordingly, we review de novo the district court's denial of

this motion to compel arbitration. See Tays v. Covenant Life Insurance, 964
F.2d 501, 502 (5th Cir.1992); Saari v. Smith Barney, Harris Upham & Co., 968
F.2d 877, 879 (9th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 494, 121 L.Ed.2d
432 (1992).
IV. DISCUSSION
20

The Federal Arbitration Act, the statute under which appellants seek to compel
Smith Barney to arbitrate before the AAA, provides that "an agreement in
writing to submit to arbitration an existing controversy arising out of such a
contract, transaction, or refusal, shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation of any
contract." 9 U.S.C.A. 2 (West 1970). The Arbitration Act also authorizes
federal district courts to "make an order directing the parties to proceed to
arbitration in accordance with the terms of the agreement." Id. 4.

21

The United States Supreme Court has noted that the Arbitration Act was
"intended to 'revers[e] centuries of judicial hostility to arbitration agreements,'
by 'plac[ing] arbitration agreements "upon the same footing as other contracts."
' " Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-26, 107
S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987) (citation omitted) (quoting Scherk v.
Alberto-Culver Co., 417 U.S. 506, 510-11, 94 S.Ct. 2449, 2453, 41 L.Ed.2d
270 (1974)). This court has explained that "[a]lthough there is a presumption in
favor of arbitration, the parties will not be required to arbitrate where they have
not agreed to do so." Goldberg v. Bear, Stearns & Co., 912 F.2d 1418, 1419
(11th Cir.1990) (citation omitted). The Federal Arbitration Act " 'simply
requires courts to enforce privately negotiated agreements to arbitrate, like
other contracts, in accordance with their terms.' " Id. at 1420 (quoting Volt
Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior
University, 489 U.S. 468, 478, 109 S.Ct. 1248, 1255, 103 L.Ed.2d 488 (1989)).

22

In determining the import of the agreements of the parties here, we find

particularly persuasive the Second Circuit's decisions in Merrill Lynch, Pierce,
Fenner & Smith, Inc. v. Georgiadis, 903 F.2d 109 (2d Cir.1990), and
PaineWebber, Inc. v. Rutherford, 903 F.2d 106 (2d Cir.1990). In Georgiadis,
appellant sought to compel arbitration of his dispute with Merrill Lynch before
the AAA. The arbitration provision of his agreement with Merrill Lynch
provided that disputes " 'shall be settled by arbitration only before the [NASD,
NYSE] or an Exchange located in the United States upon which listed options
transactions are executed.' " Georgiadis, 903 F.2d at 111. The Second Circuit
held "that the arbitration provision of the AMEX Constitution may be
superseded by a more specific customer agreement between the parties, and

that the parties here closed the AMEX Window by agreement." Id. at 114.
23

The claim in Rutherford was similar to that in Georgiadis except that the
customer agreement in Rutherford provided that arbitration be " 'in accordance
with the rules, then obtaining, of either the Arbitration Committee of the
[NYSE, AMEX, NASD] or where appropriate, Chicago Board Operations
Exchange or Commodity Futures Trading Commission.' " Rutherford, 903 F.2d
at 107-08. The Second Circuit reiterated its Georgiadis holding that customer
agreements could supersede the AMEX Window and held that the language of
Rutherford's customer agreement "should be construed simply as an agreement
to arbitrate before one of the SROs rather than the AAA." Id. at 108. The
language of the customer agreements in Georgiadis and Rutherford does not
differ meaningfully from the language of the customer agreements we examine
here. 6

24

Before turning to the language of the agreements relevant here, we briefly

address appellants' contention that customers cannot "contract away" their
option under the AMEX Constitution of electing arbitration before the AAA.
Although appellants have presented reasons why they deem AAA arbitration
preferable to arbitration before the three SROs, they have not presented any
arguments that persuade this court that the parties cannot agree to submit their
disputes to specific arbitral fora. We join the Second Circuit in holding that "the
arbitration provision of the AMEX Constitution may be superseded by a more
specific customer agreement between the parties." Georgiadis, 903 F.2d at 108.
Cf. Roney & Co. v. Goren, 875 F.2d 1218 (6th Cir.1989) ("A forum selection
clause in an arbitration agreement, just like any other contract provision, is
entitled to complete enforcement absent evidence that the contract was
procured through fraud or excessive economic power.").

25

We now turn to the agreements in this case. Appellants Luckie, Satterfield and
Mooshie have agreed with Smith Barney that disputes "shall be determined by
arbitration before" the NYSE, AMEX or NASD. Appellants Luckie and
Mooshie have also agreed with Smith Barney that disputes "shall be settled by
arbitration, in accordance with the rules of" the NYSE, AMEX or NASD.
Appellant Kahn has agreed with Smith Barney to arbitration "in accordance
with the rules, then obtaining, of either [of] the Boards of Arbitration" of the
three SROs. Through these agreements, appellants and Smith Barney have
agreed to submit disputes to arbitration before the three SROs--the NYSE,
AMEX and NASD. They have not agreed to submit disputes to arbitration
before the AAA; they have closed the AMEX Window by agreement.
Appellants may elect to submit disputes to arbitration before the NYSE, AMEX
or NASD, but they cannot compel Smith Barney to submit to AAA arbitration.

V. CONCLUSION
26

We hold that the arbitration provisions of a more specific customer agreement

can supersede the arbitration provisions of the AMEX Constitution, namely the
AMEX Window. Here, the appellants have agreed to arbitrate their disputes
with Smith Barney "before" and/or "in accordance with the rules of" the NYSE,
AMEX or NASD. Appellants, therefore, cannot compel Smith Barney to
submit to arbitration before the AAA. Accordingly, we AFFIRM the district
court in all respects.

Honorable C. Clyde Atkins, Senior U.S. District Judge for the Southern District
of Florida, sitting by designation

Appellant Jere Hughes had not entered into a separate agreement with Smith
Barney, but was a signatory on Mooshie's account

These agreements are found in the record as exhibits to Smith Barney's motion
to dismiss, abate or stay the appellants' action for declaratory judgment and as
exhibits to Smith Barney's response to appellants' motion to compel arbitration

Satterfield actually entered into two option account agreements with Smith
Barney. One contained the language quoted here. The other was substantially
similar except that it limited him to arbitration before the NYSE or the NASD
in accordance with the rules then obtaining

Appellants argue on appeal that Smith Barney failed to produce a customer

agreement between Smith Barney and Doris Kahn and that she therefore
"apparently has no customer agreement." Initial Brief of Appellants at 7. The
record indicates that Smith Barney submitted to the district court copies of a
Vantage Account Agreement signed by Kahn. This agreement expressly stated
that it was governed by the provisions of the security account agreement
between Kahn and Smith Barney. Smith Barney also submitted to the district
court a copy of a blank, standard security account agreement in use at the time
Kahn signed her Vantage Account Agreement. At no time did Kahn argue
before the district court that these documents did not accurately reflect her
agreement with Smith Barney. Further, Kahn, in the appellants' motion for
reconsideration of the district court's order, did not challenge the factual basis
of the district court's order. We will not address on appeal an issue not raised
before the district court. See Lattimore v. Oman Construction, 868 F.2d 437,
439 (11th Cir.1989)

Smith Barney also argues that, if this court holds that appellants may pursue

AAA arbitration, it should also hold that New York City is the proper venue
for such arbitration. Appellants respond that venue should not be decided by
this court, but rather should be left to the arbitrator. Because we hold that AAA
arbitration is not appropriate here, we need not address these arguments
6

Appellants direct our attention to Cowan & Co. v. Anderson, 76 N.Y.2d 318,
559 N.Y.S.2d 225, 558 N.E.2d 27 (1990), wherein the New York Court of
Appeals held that a customer agreement providing for arbitration in accordance
with the rules then in effect of the three SROs left open the option of electing
AAA arbitration through the AMEX Window. We find the language in the
present agreements closer to the language used in the Georgiadis and
Rutherford agreements. Appellants concede that these cases are not
distinguishable from the present case. See Initial Brief of Appellants at 28. We
choose to follow the logic of the Second Circuit